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CTA upholds Davao City’s fees on San Miguel Foods


LOCAL governments can collect slaughter fees as part of their regulatory powers, the Court of Tax Appeals (CTA) ruled, as it upheld the fee imposed on San Miguel Foods, Inc. (SMFI) by the Davao City Treasurer’s Office in 2016.

In a 19-page decision dated Jan. 31 and made public on Feb. 7, the CTA full court said the local government unit had the jurisdiction and authority to collect the fees worth P625,023.30 for slaughtering birds and poultry for food products in 2016.

“Clearly, the regulation of the slaughter of live bird/poultry, which is the activity undertaken in SMFI’s dressing plants, is covered within the standards of health and safety for the exercise of the city’s regulatory powers,” it said.

“All told the permit fee to slaughter, which petitioner SMFI paid under protest, is in the nature of a license fee and not a tax,” it added.

It noted that the fees were not local taxes but were used to regulate a specific public interest business, including slaughtering livestock and poultry.

The Davao City revenue code requires private establishments to secure permits from the city veterinarian before they can slaughter animals for their food commodities.

The firm would then have to pay a fee to the city treasurer for the said permits.

Last year, the CTA affirmed a similar permit fee imposed by the Davao treasurer on SMFI worth P338,731.90.

SMFI, a subsidiary of a food conglomerate based in Pasig City, argued that the tax tribunal had jurisdiction over the regulatory fees and local taxes.

The tax court disagreed, saying it did not have jurisdiction over disputes involving the imposition of fees by local government units.

“It bears stressing that the police power delegated to the local government unit under the local government code subsumes the promotion of health and safety within their territory,” it said. — John Victor D. Ordoñez

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